Structural Redundancy & Robust Organizations

Transcription

1 Structural Redundancy & Robust Organizations N SMITH University of Michigan YUN HOU University of hicago uke Strategy onference

2 1 B B F G Redundant Heterogeneity & Robust Organizations Problems we want to solve. a. The benefits of interpersonal (functional) heterogeneity (e.g., recombinant knowledge, creativity, flexibility, etc.) are many but difficult to realize. b. Heterogeneous people (hell even dogs and people) tend to homogenize talking like, thinking like, acting like one another over time, with repeated exposure. c. Heterogeneous groups are fragile. d. Heterogeneous groups tend to fragment into homogeneous subgroups. e. How can we structure a team to sustainably experience the benefits of interpersonal heterogeneity?

3 a.1 Theory 1.a Benefits of heterogeneity B Interpersonal heterogeneity engenders creative problem solving (McLeod, Lobel, ox 1992; Hoffman and Maier 1961; Bantel and Jackson 1989; Mannix and Neale 2005) by increasing breadth of perspective and improving the quality of ideas (Hoffman 1979; Milliken and Martins 1996; Burt 2004) through extended search (Hastie 1986; Bantel and Jackson 1989; isenhardt and Schoohoven 1990; Wiersema and Bantel 1992) to positively affect performance (Hambrick, ho, and hen 1996; Burt 2004) especially when the environment is uncertain (Boeker 1997; anella et al. 2008)

4 a.1 Theory 1.b Identifying points of failure B With time and repeated exposure, heterogeneous people start to think, talk, and act alike (arpenter 2002) Failure point #1 Homogenization in part as a function of the group paradox (Berg & Smith 1995; Bourdieu 2002) in part as a function of etiquette biases and discussion cascades (Burt 2007; Sunstein & Hastie 2008) all resulting in group-think (Janis 1972; Preffer 1983; Bantel & Jackson 1989) and leading the performance of heterogeneous groups to converge to the performance of homogenous groups over time (Watson, Kumar, and Michaelson 1993)

5 a.1 Theory 1.b Identifying points of failure B Failure point #1 Homogenization Failure point #2 Fragility Heterogeneous groups are inherently fragile (Bothner, Smith, & White 2010) both structurally as knowledge is idiosyncratic and distributed, raising the group s collective dependence on each individual member and empirically, as interpersonal heterogeneity elevates group turnover (Jackson et al. 1991; Millikin & Martin 1996; O Reilly, aldwell, & Barnett 1989; See also Smith-Lovin 2007, p. 116)

6 a.1 Theory 1.b Identifying points of failure B / B/B / Failure point #1 Homogenization Failure point #2 Fragility Homogenization & Fragility may be overcome by redundancy structurally, as the group becomes less fragile to shocks such as deletion and behaviorally, as individuals are more inclined and able feel psychologically safer to express their opinions, and thus less subjective to homogenization, when they are part of a like-minded subgroup (sch 1952; Gibson and Vermeulen 2003)

7 a.1 Theory 1.b Identifying points of failure B / B/B / / B/B / Failure point #1 Homogenization Failure point #2 Fragility Failure point #3 Fragmentation Homophily leads similar people to associate with one another (Blau 1977; McPherson, Smith-Lovin, & ook 2001) leading homogeneous subgroups within a larger collective to fragment along fault lines (Blau 1977; Lau & Murnigham 1998) thereby undermining the benefits of heterogeneity and impeding group-level cohesion (Blau 1977; Lau & Murnighan 1998; kerlof & Kranton 2010; O Leary & Mortensen 2010) explaining, perhaps, the results of a review illustrating that 40 years worth of papers on interpersonal heterogeneity (80 papers) indicate that interpersonal heterogeneity has, on average, a negative effect on group performance (Williams & O Reilly 1998)

8 a.1 Theory 1.c Redundant heterogeneity B / B/B / / B/B / B B Failure point #1 Homogenization Failure point #2 Fragility Failure point #3 Fragmentation Teams, groups, and organizations are often divided into two or more distinct levels or have core-periphery structures (Harrison & Klein 2007) iversity- (knowledge) and isparity- (hierarchy) based faultlines operating simultaneously (arton and ummings 2012) Proposition: ross-level homogenous subgroups continue to solve the problems of homogeneity and fragility and are also less likely to result in fragmentation, in either direction (knowledge or hierarchy). e.g., cademic departments, medical teams, professional service firms, sports teams, etc.

9 a.2 Hypotheses & Measurement 2.a Hypotheses B H0: Heterogeneity, in theory, has a positive effect on group performance, but empirically often has a negative effect. Failure point #1 Homogenization Failure point #2 Fragility / B/B / / B/B / Failure point #3 Fragmentation B B H1: Redundancy has a positive effect on group performance.

10 a.2 Hypotheses & Measurement 2.a Hypotheses B Failure point #1 Homogenization H0: Heterogeneity, in theory, has a positive effect on group performance, but empirically often has a negative effect. H2: Redundancy slows the decay rate of a positive effect of heterogeneity on performance. Failure point #2 Fragility H3: Groups with redundancy are less (negatively) affected by disruptions, such as turnover. / B/B / / B/B / B B Failure point #3 Fragmentation H4: Group cohesion (lack of fragmentation) mediates some of the positive effect of redundancy on performance. H1: Redundancy has a positive effect on group performance.

11 a.2 Hypotheses & Measurement 2.a Hypotheses n example, Strategy epartment in a Business School Primary Level Seconday Level B B F G Primary Level: Senior faculty Secondary Level: Junior faculty : Micro economics training/focus B: Macro economics, IB training/focus : Sociology training/focus : Strategy training/focus : ntrepreneurship training/focus F: Social psych training/focus G:? Secondary Primary B B G F H2 (Homogenization): Heterogeneity in the primary level will be better preserved. necdote, I go to my junior colleagues in my field to keep up with the literature and latest methods. H3 (Fragility): Profile of heterogeneity will be more robust. necdote, We lost two econ-oriented senior faculty over the last three years and our seminars are now really missing a sense of formal rigor. H4 (Fragmentation): ross-level redundancy lowers the probability for the group to fragment along either knowledge-based or hierarchical fault lines. necdote, s not the only one making my tenure decision. I guess I need to keep all those economists happy as well.

12 a.2 Hypotheses & Measurement 2.b Measuring redundant heterogeneity Primary Level Seconday Level B B F G T i,t = vector of heterogeneity = [ BFG] j S j N i,t 2 [ ] [ ] p = s = Secondary Primary B B G F R i,t = R i,t = p s, where p s = p i s i N i,t 1* 2 +1*1+1*1+1*3+1* *1+ 0 *1 16 R i,t = 0.563

13 a.3 mpirical nalysis 3.a The NB Scope: 30 teams seasons (dropped 1998 due to failed contract negotiations and shortened season). Heterogeneity: xposure to style of play (i.e., knowledge and experience), as proxy d for by college conferences.* Levels: Primary and Secondary players, according to the number of minutes played (threshold of 22 min/game, or 1800 minutes, or 2/3 of a standard deviation over average number of minutes played lots of robustness tests). verage # in primary group = 4.7, min = 2, max = 8. T i,t = j S j N i,t Primary Level Seconday Level B G B F P i,t = j S j n i,t R i,t = p s N i,t Three (four) measures of team composition

14 a.3 mpirical nalysis 3.a The NB 1988 harlotte Hornets (20 wins) Redundancy = 0.063; Homogeneity, T = 0.10; Homogeneity, P = 0.24 Tripucka (Other) Rambis (W) Reid (W) hapman (S) ureton (Horizon) Other (x2) W (x2) P10 BIG12 MI US BIG10 TL Miami Heat (52 wins) Redundancy = 1.00; Homogeneity, T = 0.30; Homogeneity, P = 0.39 Wade (US) Payton (P10) Haslem (S) Walker (S) Williams (S) O Neal (S) Posey (TL10) US P10 S S S S BIG12 OTHR MI W

15 a.3 mpirical nalysis 3.b Main effects & Robustness checks Outcome: Performance as wins (out of 82 games in a season). Mean = 41, sd = 12.9, max = 72 ( da Bulls), min = 11 (Mavericks and Nuggets) = Heterogeneity of the team + Heterogeneity of the levels + Redundancy + ontrols [age, average draft selection, points t-1, offensive rebounds t-1, defensive rebounds t-1, turnovers t-1, shooting percentage t-1, free throw percentage t-1, coaching experience, team experience, # in primary group, retooling ] + 33 count variables for conferences, F, R(1)

16 a.3 mpirical nalysis 3.b Main effects & Robustness checks Heterogeneity is bad 2.2* Heterogeneity in the primary group is good (1 sd increase = 8% more wins for average team). So what does the positive effect of homogeneity at the team level mean? H1

17 a.3 mpirical nalysis 3.b Main effects & Robustness checks

18 a.3 mpirical nalysis 3.c Mechanism tests (H2, H3, H4) Outcome: Performance as wins (out of 82 games in a season). Mean = 41, sd = 12.9, max = 72 ( da Bulls), min = 11 (Mavericks and Nuggets) = ll prior coefficients + Heterogeneity of the primary group * Team xperience * Redundancy (H2) [Homogenization: Positive effect of heterogeneity on performance will decay over time, except among teams with redundancy] + Turnover in the primary group * Redundancy (H3) [Fragility: Turnover in the composition of heterogeneity will have a negative effect on performance, except among teams with redundancy] + Mediation by Team ohesion (H4), where cohesion is measured using thiraj & Garg s measure of team complementarity [Fragmentation: Redundancy s positive effect on performance is due in part to its positive effect on group cohesion]

19 a.3 mpirical nalysis 3.c Mechanism tests (H2, H3, H4) 5.5 additional losses due to turnover in P. Offset by R. ecay. fter 4 seasons, positive effect of heterogeneity is gone. No evidence of decay among teams with higher than average redundancy. H3 H2, low R H2, high R H4 Interpret with caution

20 a.4 onclusion 1 Redundant Heterogeneity & Robust Organizations B B F G Scope conditions. a. Primacy of single goal across levels. b. osts of redundancy? c. Hierarchy only? Or other structural divisions? d. Size effects of subgroups? Implications. a. ffect of team-level homogeneity was spurious. It s only a particular kind of team-level homogeneity that is achieved via redundancy. b. Unlike heterogeneity or homogeneity, redundancy is realized between different levels of a group or organization. c. Groups and teams researchers should consider more fully the implications of structure when analyzing the traditional constructs of heterogeneity (diversity).

21 a.5 Supplemental materials 5.a escriptive statistics and correlations

22 a.5 Supplemental materials 5.b onference Playing Style There are definitely distinct playing styles by conference. (e.g., pressure defense in the, fast breaks and physicality in the Pac-10 and Big ast) onference-specific styles result from intense competition and inter-team mimicry that occurs primarily within conferences. Standout college coaches such as Bob Knight, Gean Keady, ean Smith, or Mike Krzyzweski are imitated by rival coaches and therefore drive the playing styles of their respective conferences. To compete against a set of teams with a certain style of play, learning that style is necessary.